If you have ended up with options on your balance sheet, but have only put up part of the money required to buy those options at the time, then where did the rest of the money come from? Leverage via a loan is one possibility, but I don't think you describe an alternative mechanism.

I wasn't trying to describe an alternative mechanism, I was describing (albeit in a rushed manner) how there are instruments which naturally allow leverage through the margin being smaller than the actual market value of the contract.

I don't feel like typing out the wiki page for how margin calls happen across brokers and exchanges.

Yes, this is one possibility, assuming short-selling of options contracts is available at retail level (is it really? I don't have experience of this, but would expect it not to be. After all, to take a short position in an asset with an options market, just buy a put option, surely? To take a long position, buy a call option? Then the amount you risk is limited to what you paid for the options. Being able to short sell options just seems pointless. Leave the issuing of options (and short selling options has similar risk profile to issuing them) to the institutions).

If it were indeed the case, then "selling insurance for the peg staying in place" is a nice analogy.

I'm not an expert on options either, but as much as you claim to be clearing up confusion, you are adding your own to the mixture too:

1. Going long or short the underlying is just a tiny fraction of possible reasons behind buying or selling options. You are right that they are not for the uninitiated, but there are many in the "retail" segment who are otherwise proficient option traders. Bear in mind that the veteran trader who trades $1M of his own money is also classified as retail.
2. You can certainly do it even at retail level, since all you need is access to an exchange like CBOE, which many retail brokers provide. If you don't know this, I'm really not sure how much you've looked into the area you are advising us about
2. Can you please tell me what is the difference between issuing and short selling options in your nomenclature? For exchange traded options at least, writing/issuing/shorting is one and the same thing.

I put what I had saved while working into an option which was supposed to be virtually risk free.

That's all we know for now folks, he placed his savings in a forex bank into an option but don't know what type of option or the location of the Forex bank. Without more information on the details around the trade it's hard to give any meaningful advice.

To the OP I'm really sorry this happened to you and many many other investors out there. I hope you are able to find some legal recourse to help cover your losses.

On a side note, when reading this thread at work today, I got a adbanner telling me that forex trading can loose you a lot of money unless you use this one weird old trick that traders hate.
I so hate these kind of ads.

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On a side note, when reading this thread at work today, I got a adbanner telling me that forex trading can loose you a lot of money unless you use this one weird old trick that traders hate.
I so hate these kind of ads.

Me too. You'd think they'd get someone to proof read and get rid of the spelling mistakes first.

He lost his entire lifes savings plus more. He currently does not have and any income (stundent) to be able to see his way clear to pay any of the negative balance back. What does the actuall loss amount really matter against that kind of information? How would you feel if you lost all your lifes savings and ended up in a big black pit of debt on top of it all?

Because, like it was mentioned earlier, if we don't know the actual numbers, we can't provide accurate advice.

Good traders don't care about the total amount only the percentage. I made good percentage on that announcement. Also never trade without a stop loss which should never be more than 1% of your account. No stop loss is like doing a tour of langstrasse without a condom.

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I am learning so much this week. Apparently some companies allow you to leverage 200:1.[/URL]

Pfft, that's nothing. Real men trade the ruble with 1000:1 leverage using an account denominated in Argentinian pesos with money borrowed from Ivan the local loan shark. All the while sitting on an armed landmine and using a bear trap as a mouse pad.

Good traders don't care about the total amount only the percentage. I made good percentage on that announcement. Also never trade without a stop loss which should never be more than 1% of your account. No stop loss is like doing a tour of langstrasse without a condom.

You do realize that a stop loss would either not have triggered in a scenario like this, or it would have executed more or less at the bottom, right? They do not guarantee both execution and the price level, only one of those. Relying on stop losses is like relying on a condom made of paper. Sure, it might offer superficial protection, but get just a bit wild and you are in a world of hurt.

He lost his entire lifes savings plus more. He currently does not have and any income (stundent) to be able to see his way clear to pay any of the negative balance back. What does the actuall loss amount really matter against that kind of information? How would you feel if you lost all your lifes savings and ended up in a big black pit of debt on top of it all?

I read all that.
Still, we could be talking about 10K which is a very big amount of money for some people, but smaller for others (obviously).

I know personally a few people which are in those extremes and I know their perspective is very different.

Why the actual loss would matter?
Because that's the exact problem, which needs to be accurately identified if you want to take appropriate measure.

You won't take the same actions if you lost X CHF as opposed to XXXXCHF.

How would I feel is irrelevant, and absolutely not helpful for the OP:
Feeling is "emotional", if the OP take an "emotional response" to this "unknown scale" disaster, the situation can become much worst, on top of being very unpleasing.

What the OP needs is a cold, mathematical approach regarding a loss of XXCHF. Or a strategy based on" cold" facts (lawyer, laws, contracts, numbers, etc...).

The OP can keep his friends and family for the "emotional" support, I don't believe in "virtual emotional support", especially provided by strangers.

Good traders don't care about the total amount only the percentage. I made good percentage on that announcement. Also never trade without a stop loss which should never be more than 1% of your account. No stop loss is like doing a tour of langstrasse without a condom.

Because, like it was mentioned earlier, if we don't know the actual numbers, we can't provide accurate advice.

OP quit his job and is/was living on his savings while studying. That allows the assumption that this is intended to last at least one year, probably longer.

Which means he had at least 50k savings (probably more as the school/uni may well take multiple yaers). And he says he's quadruple that in the red now so a likely no-less-than is 200k in the red, with a fair chance of it being 500k or even more.